SAC Capital Advisors LP fund manager Michael Steinberg was arrested by FBI agents as the U.S. government’s wide-ranging probe of insider trading at the $15 billion firm got one step closer to founder Steven A. Cohen.

Steinberg, 40, worked at SAC’s Sigma Capital Management unit and is the most senior SAC official to be charged. He was one of 15 portfolio managers handling technology, media and telecommunications stocks before being placed on leave in September, said a person with knowledge of the matter. His lawyer, Barry Berke, said his client did nothing wrong and will appear in New York federal court later today….”

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“The Standard & Poor’s 500 Index (SPX)’s record rally probably has another year to go as investors give up their pessimism and buy, according to Laszlo Birinyi, one of the first money managers to tell clients to buy before the bull market began.

“As long as you have this sort of hesitancy or reluctance instead of acceptance, the positive case is still very much intact,” Birinyi, president of Birinyi Associates Inc. in Westport,Connecticut, said in a March 26 phone interview. “Don’t go looking for the exit. Leave the door open for a good year, because that is the one possibility that I do not hear.”

The S&P 500 rose 0.4 percent to 1,569.19 yesterday, exceeding its previous record from October 2007 and recovering losses from the financial crisis that wiped more than $10 billion from U.S. market value. Even with the rally, share volume on all U.S. exchanges has declined for four straight years and, at less than 6.4 billion shares a day, is the lowest since at least 2008, according to data compiled by Bloomberg.

Birinyi advised clients to purchase shares before March 2009, when the S&P 500 reached a 12-year low. The U.S. equity benchmark is up 132 percent since then. While companies with earnings most-tied to the economy such as retailers, computer makers and banks have led the advance, makers of home products such as soap and drugmakers are up the most in 2013.

“It’s surprising to see that it’s not the deep cyclicals or the names that I would have expected in a really good market,” Birinyi said. “It just shows that people are comfortable with the market, and there’s a little bit more of a focus on stock picking than people realize.”

S&P Profits…”

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[youtube://http://www.youtube.com/watch?v=BFg6FG8MVdo 450 300]

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“Post-traumatic stress disorder (PTSD) may be linked to more than the combat of war, but also to actions that violate a soldier’s sense of morality, according to new research.

The study, which will be published in the April issue of the Personality and Social Psychology Bulletin, found that PTSD levels can be influenced by the amount of support the nation has for the war itself, which can impact the perception of the conflict’s moral standing. Although citizens may express support for their nation’s troops, a wide lack of support for the war being fought—such as displayed through anti-war protests—can cause a soldier to feel that his actions may be in violation of what is morally correct. The result is an increase the level of PTSD in that soldier.

“What we would suggest, however, is that it is not protest, per se, that puts a soldier’s mental health at risk, but the initial decision to go to war,” David Webber of the University of Alberta and the study’s lead author told Raw Story. “War protest usually only occurs when that war is unfounded. If war is enacted for legitimate reasons, the public will usually support that effort.” …”

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“The Computer Fraud and Abuse Act was passed in 1984 to combat the cracking of huge computer systems owned by financial institutions and the government. Nearly 30 years and seven amendments later, the law is regarded by many lawyers and academics as overly “expansive” and “sweeping,” as it lets the government incarcerate “any Internet user they want,” according to former federal prosecutor Orin Kerr.

“The Computer Fraud and Abuse Act is the most outrageous criminal law you’ve never heard of,” Tim Wu, a Columbia law professor and pioneer of network neutrality, wrote in the New Yorker. “It bans ‘unauthorized access’ of computers, but no one really knows what those words mean.”

Despite the enormous reach of the Computer Fraud and Abuse Act as it currently stands – it was the same law used by prosecutors to torment late Internet activist Aaron Swartz prior to his suicide on Jan. 11 — the House Judiciary Committee has actually proposed a number of expansions to the law in a new draft, which Tech Dirt says will be “rushed” to Congress during its “cyber week” in the middle of April….”

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CRAZY TASTE !

“The food fraud story has now progressed from somewhat humorous with the undersized Subway footlong subs, to the highly disturbing with the revelations of horse meat and fake tuna, to the really creepy with the now potential emergence of dog meat in UK lamb curry.  No you can’t print lamb folks, which is exactly why many humans are now eating worse than their pets in the Western world.

A mystery meat, which has defied the best efforts of scientists to identify it, has been found in a lamb curry as part of an investigation into food fraud.

 

The discovery raises new questions about just what is going into the nation’s takeaways and processed foods.

 

The meat in a Beef in Black Bean Sauce dish turned out to contain high levels of chicken material including blood, while a burger contained no beef at all, other than blood and heart.

 

However, most alarming of all was a curry. A spokesman for the programme said: ‘Just when we thought things couldn’t get any worse, the results came in for an Indian Lamb Curry.

 

‘It did contain meat, but that meat was not lamb, not pork, nor was it chicken or beef. Not horse, and not goat either.

 

All of the many tests to date by the lab used by the programme have failed to identify exactly which animal was the source of the meat.

 

The revelation raises many grim possibilities. There is evidence from Spain, for example, of meat from dog carcasses being processed for use in pet food….”

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“CHICAGO—U.S. corn futures fell sharply Thursday after government reports showed higher-than-expected stockpiles, and forecast farmers would plant the largest crop seen in more than 75 years.

The U.S. Department of Agriculture said domestic corn stockpiles reached 5.4 billion bushels as of March 1, well above analysts’ expectations, in a sign that less than expected was used for animal feed, while last year’s harvest may have been larger than originally estimated by the agency.

“The fact that everybody was so completely wrong really suggests that the crop was bigger,” said Bryce Knorr at Farm Futures, a trade publication.

Chicago Board of Trade May corn futures were recently down 40 cents, or 5.4%—the maximum daily change allowed by the exchange—at $6.95 1/4 a bushel….”

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Bow Tie interview

[youtube://http://www.youtube.com/watch?v=geHLdg_VNww 450 300]

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Should we care about things priced in gold? Many will say yes because a number is really nothing, like a new closing high on the S&P,  until you apply value to it.

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“Back in 2008 when the market was in the sewer, Warren Buffett wrote a piece laying out the case for buying American stocks called, “Buy American. I Am.”

Now that the market seems to be going nowhere but up, an analyst has posted the exact opposite case for stocks on SumZero, a networking site for buy-side researchers.

And users are hating it.

Ben Michaud, an analyst at a large, New England-based investment firm with several billion in AUM, was kind enough to let SumZero share his slide deck, entitled “Sell American. I Am.”

Maybe you’ll take to it more kindly than SumZero users did. They’ve rated Michaud’s thesis the worst of all time —0.3 out of 100.00.

But perhaps that’s because this isn’t what anyone wants to hear right now.

And for the record, Michaud’s firm does not endorse this thesis, it’s his own independant work.

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“Gary Kain spent 20 years at Freddie Mac managing as much as $800 billion of bonds before the U.S. took over the company. Since 2009, he’s used his knowledge of the home-loan market to help turn American Capital Agency Corp. (AGNC) into the fastest growing mortgage debt investor.

American Capital’s assets grew to $100.5 billion at the end of last year from less than $5 billion three years earlier, making the Bethesda, Maryland-based real estate investment trust the largest after Annaly Capital Management Inc. (NLY), in an industry that’s drawing attention from investors and the Federal Reserve for its double-digit yields and rapid expansion.

REITs bought more than $100 billion of government-backed mortgage securities in 2012, the most since at least the credit crisis, and will purchase another $60 billion in 2013, JPMorgan Chase & Co. estimated this month. Fed Governor Jeremy Steinpointed to the expansion of mortgage REITs, which have amassed almost $400 billion of the debt, during a speech last month on risky behavior in credit markets influenced by the central bank holding borrowing costs near zero for a fifth year and investors searching for high-yielding assets.

“Agency mortgage REITs deserve attention in particular because they have exploded in size,” said John Gilbert, chief investment officer at General Re-New England Asset Management, a unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) that oversees $64 billion. “We’ve been dealing with the unintended consequences of monetary policy for a long time. We have to be on the lookout for the downside.”

Best Returns…”

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“Amazon.com Inc. (AMZN), the world’s biggest online retailer, and discount Internet sellerOverstock.com Inc. (OSTK) lost a challenge to New York’s Internet sales tax law as the state’s highest court rejected their arguments that it was unconstitutional.

Amazon, based in Seattle, and Overstock.com, based in Salt Lake City, sued the state’s Department of Taxation and Finance separately in 2008, seeking to overturn a law requiring retailers to pay taxes if they solicit business in New York through a link to a website.

The companies argued that the law violated the Commerce Clause of the U.S. Constitution by subjecting online retailers without a physical presence in the state to sales and compensating use taxes. It violated the Due Process Clause by “creating an irrational, irrebuttable presumption of solicitation of business within the state,” they said.

Justice Eileen Bransten dismissed the suits in January 2009. An appeals court in Manhattan affirmed her rulings in 2010, and the state Court of Appeals agreed today, saying the companies “established an in-state sales force” through agreements with affiliates who received commissions for posting links on their websites directing users to Amazon.com or Overstock.com.

‘Appropriate’ Burden…”

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“While the proposed takeovers of Dell Inc. (DELL) and H.J. Heinz Co. dominated headlines in the first quarter, global dealmaking stumbled, with March on track to be the worst month for mergers in more than three years.

Takeovers fell 4.4 percent from a year ago and 36 percent from the previous quarter to more than $461 billion, according to data compiled by Bloomberg as of March 27. Berkshire Hathaway Inc. (BRK/A)’s $23 billion purchase of Heinz and the $24.4 billion buyout of Dell Inc. (DELL) in February failed to spark a rally in March, when mergers shrank to $100 billion, on track for the worst month since 2009.

Concern about U.S. spending cuts, leadership changes inChina and persistent sovereign debt problems in Europe are weighing on executive confidence, said Mark Shafir, global co- head of mergers and acquisitions at New York-based Citigroup Inc. (C) Still, record cash piles and global equity markets at an almost five-year high are pushing more companies to weigh acquisitions to lock in growth before interest rates rise.

“There is still a lot of hesitancy among corporates to do big deals,” said Henrik Aslaksen, global head of M&A at Frankfurt-based Deutsche Bank AG. (DBK) “There is a psychological barrier, but there is no doubt that the dialogue and intensity are increasing.” …”

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“Confidence among U.S. consumers fell to a six-week low and claims for jobless benefits rose more than forecast, highlighting the risks to the economy posed by federal government budget cuts.

The Bloomberg Consumer Comfort Index dropped to minus 34.4 in the week ended March from minus 33.9 as Americans’ views of the economy deteriorated to the lowest point since early February. Applications for unemployment insurancebenefits rose by 16,000 to 357,000 last week, the Labor Department said.

The figures represent a blemish for an economy that has shown signs of strengthening on the heels of a housing marketrebound and a pickup in manufacturing. Federal Reserve policy makers are concerned the automatic reductions in government spending that began this month may impede the progress of the expansion after a fourth-quarter slowdown.

“There will be some impact from the sequester, and certainly the second quarter should look somewhat softer than the first quarter,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities in New York. At the same time, “it’s domestic growth that’s driving the economy — it’s housing, it’s consumer spending, it’s business consumption.”

Stocks rose, sending the Standard & Poor’s 500 Index above its record closing level, as the reopening of banks in Cyprus helped ease concern about Europe’s debt crisis. The S&P 500 climbed 0.2 percent to 1,566.18 at 12:14 p.m. in New York.

Fourth Quarter…”

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U.S. markets fought off negativity at the open to be up marginally by lunch time.

The S&P has managed to hit intra day all time highs; bulls wait for closing confirmation.

It is the last day of the quarter so some selling into strength is expected.

Interesting note here is that we have never had a down year when Q1 produces 8% or more.

Still one has to wonder why we rally two days before the Cyprus event and such a meager rally on the day we find out things are not so crazy or troublesome as Cyprus reopens banks.

Currently the DOW is up 23 points, S&P is up 2.3, NASDAQ up 1.6, WTI is flat, and metals across the board are down.

Market update

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“China and Brazil agreed to trade in each other’s currencies just hours ahead of the BRICS summit in South Africa.

The deal, which extends over a three-year period and amounts to an exchange of about $30 billion in trade per year, marks the latest effort among two of the world’s largest emerging economies to shift the dynamics of international trade that have long favored the U.S. dollar.

“Our interest is not to establish new relations with China, but to expand relations to be used in the case of turbulence in financial markets,” Brazilian Central Bank Governor Alexandre Tombini said, Reuters reported.

By shifting some trade away from the U.S. dollar, the world’s primary reserve currency, the two countriesaim to buffer their commercial ties against another financial crisis like the one that resulted from the collapse of the U.S. housing market bubble in 2008.

“Trade ties between China and Brazil are of great importance to the two countries’ economies amid global woes and the member states’ economic stability is vital for the BRICS mechanism,” said Zhou Zhiwei, a researcher with the Chinese Academy of Social Sciences, Xinhua reported.

Trade between China and Brazil has exploded in recent years from $6.68 billion in 2003 to over $75 billion in 2012, and in 2009, China replaced the U.S. as Brazil’s main trading partner….”

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“In an article titled, “Use of Food Stamps Swells Even as Economy Improves,” the Wall Street Journalreports that “The financial crisis is over and the recession ended in 2009. But one of the federal government’s biggest social welfare programs, which expanded when the economy convulsed, isn’t shrinking back alongside the recovery.”

The report continues, “Enrollment in the Supplemental Nutrition Assistance Program, as the modern-day food-stamp benefit is known, has soared 70% since 2008 to a record 47.8 million as of December 2012. Congressional budget analysts think participation will rise again this year and dip only slightly in coming years.”

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“Next time you find yourself staring at an empty savings account, feel free to blame the era you live in.

Middle-income households would havesaved roughly $1,400 more a year by 2005if their incomes had grown at the same rate as the top 10 percent of earners from 1980 to 2008, a new paper finds.

By comparing the income data of top-earning households with everyone except the poorest 10 percent, University of Chicago professors Marianne Bertrand and Adair Morse discovered that the growing levels of U.S. income inequality had caused about a 3 percent decrease in middle-income household savings by the mid-2000s. Altogether, the U.S. personal savings rate for all Americans declined from around 10 percent of disposable income in the early 1980s to just 1.5 percent in 2005, the researchers write….”

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“WASHINGTONThe U.S. economy grew at a slightly faster but still anemic rate at the end of last year. However, there is hope that growth accelerated in early 2013 despite higher taxes and cuts in government spending.

The economy grew at an annual rate of 0.4 percent in the October-December quarter, the Commerce Department said Thursday. That was slightly better than the previous estimate of 0.1 percent growth. The revision reflected stronger business investment and export sales.

Analysts think the economy is growing at a rate of around 2.5 percent in the current January-March quarter, which ends this week.

Steady hiring has kept consumers spending this year. And a rebound in company stockpiling, further gains in housing and more business spending also likely drove faster growth in the first quarter.

The 0.4 percent growth rate for the gross domestic product, the economy’s total output of goods and services, was the weakest quarterly performance in almost two years and followed a much faster 3.1 percent increase in the third quarter. The fourth quarter was hurt by the sharpest fall in defense spending in 40 years.

For all of 2012, the economy grew 2.2 percent after a 1.8 percent increase in 2011 and a 2.4 percent advance in 2010. Since the recession ended in mid-2009, the economy has been expanding at sub-par rates as a string of problems from higher gas prices to Europe’s debt crisis have acted as a drag on the U.S. economy.

Growth appears to be strengthening this year even after taxes increased on Jan. 1 and automatic government spending cuts totaling $85 billion started to take effect on March 1. The Congressional Budget Office has estimated that the combination of tax increases and spending cuts could trim economic growth this year by about 1.5 percentage points. The CBO is predicting just 1.5 percent growth for 2013.

But so far, the economy is showing signs of holding its own against the fiscal drag.

Employers have added an average of 200,000 jobs a month since November. That helped lower the unemployment rate in February to 7.7 percent, a four-year low.

Economists expect similar job gains in March, in part because a measure of unemployment benefit applications fell this month to a five-year low….”

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“Bernard Madoff, speaking out from prison, says the banks knew of his Ponzi scheme all along. The perpetrator of a history-making $50 billion Ponzi scheme wrote in a letter to MarketWatch from jail that he is now telling government committees the story.

Madoff: “From my first interview to the media I have said that ‘the banks must have known,’ and were complicit and contributing to my crime.”

In the emailed letter, he pointed to J.P. Morgan Chase & Co. JPM -0.27%, Bank of New York Mellon Corp.  BK -0.04%, HSBC Holdings PLC  HBC +0.83% and Citigroup Inc.C -0.32% as having access to information about his scam. He added that other banks also knew.

Madoff wrote that “the trustee seems unwilling to act on my offer” to help and is therefore “offering this information to the appropriate governmental committees in the hope that this information will prove helpful in future regulation of the appropriate institutions.”

The House Financial Services Committee and the Senate Banking Committee had no immediate comment on whether they had received information from Madoff. A spokesman for the Office of the Comptroller of the Currency declined to comment, and a spokesman for the Treasury Inspector General’s office did not return calls from MarketWatch….”

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